United States stock markets fell on Monday (Tuesday AEST), ending a nine-day rally for both the S&P 500 and the Dow, as investors weighed renewed tariff threats from President Donald Trump and awaited the Federal Reserve’s monetary policy decision later this week.
The Dow Jones Industrial Average declined 98.6 points, or 0.2%, to finish at 41,218.8. The S&P 500 lost 36.3 points, or 0.6%, to close at 5,650.4, while the Nasdaq Composite dropped 133.5 points, or 0.7%, to end at 17,844.2.
The pullback comes amid concerns about heightened trade tensions. On Sunday, Trump announced a new 100% tariff on foreign-produced films, labelling foreign incentives to attract movie production a "national security threat".
While it remains unclear how tariffs will affect cinema and streaming releases, entertainment stocks declined, with Netflix falling 1.9% and Paramount losing 1.6%.
Treasury Secretary Scott Bessent told CNBC that trade deals are “very close”, aligning with Trump’s comments suggesting agreements could be announced as soon as this week.
However, Trump also noted he has no intention of speaking with Chinese President Xi Jinping, dampening hopes for a breakthrough in U.S.-China trade relations.
Meanwhile, Bloomberg reported that India had proposed reciprocal zero tariffs on steel, auto parts, and pharmaceuticals up to a certain threshold, boosting investor optimism.
On the data front, Institute for Supply Management revealed stronger-than-expected growth in the U.S. services sector in April, although executives expressed growing concern over tariff impact.
Attention now turns to the Federal Reserve’s two-day policy meeting beginning Tuesday. Markets price in a 97.3% chance that Fed officials will hold the interest rate steady at 4.25% - 4.5%, according to CME Group’s FedWatch Tool.
On the bond markets, yields rose as the 10-year Treasury yield climbed 1% to 4.349%, while the 2-year yield increased 0.5% to 3.841%.
